Wine Duty Frozen – A Cold Move?

This Wednesday 18th March, the UK waited in anticipation as chancellor George Osborne delivered his 2015 Budget to Parliament. The political event was typically drawn out and as the general public lost all interest by Wednesday evening (and the Lib Dems lost all sense by Thursday morning…a ‘Yellow Budget’?!), the inevitable budget-day-question creeping its way into everyone’s mind was: “Am I a winner or a loser?” Well, if you’re as obsessed with wine as we are, then you’re a winner…sort of.

The news that the chancellor had announced a freeze on wine duty in 2015 was met with first with joy and then later with begrudging disappointment by the wine world. With The Wine and Spirit Trade Association (WSTA) launching their official ‘Drop The Duty!’ campaign back in mid-December 2014, a lot of hard work was expended in attempting to persuade Mr Osborne to cut the duty on wine and spirits. The campaign was greeted with zealous support by the drinks trade and it’s not difficult to see why. Exposing facts such as UK consumers currently paying almost 60% tax on an average priced bottle of wine, when the wine and spirit industry directly supports around 518,000 jobs in the UK and is worth £22 billion annually to its economy, the campaign highlighted the inequality UK businesses and consumers face.

Using the strapline, ‘Small drop, big cheer’, the campaign called on UK consumers to take action against the unfair level of tax and email their MP to urge George Osborne to make a modest 2% cut in duty across all alcohol products in Budget 2015. Wine has not received a cut since 1984 and Miles Beale, chief executive of the WSTA, said, “By cutting the duty on wine and spirits at the next Budget the Chancellor would provide welcome relief for the British public, boost jobs and growth and generate an additional £1.5bn for the public finances.”

In a likely pre-election charm offensive, the chancellor half-heeded the campaigns calls, but wine still fared worse than other drinks. Duty on spirits and cider was cut by 2%, and beer by 1p per pint, whilst wine was left to make do with a freeze on duty, leaving the UK with still the second highest rate of wine duty in the UK (after Ireland).

Although an improvement on last year, when wine duty still rose with inflation whilst the ‘escalator’ of annual increases for alcoholic drinks was scrapped, Bibendum’s chart below shows that half the cost of a cheap bottle of wine still goes to the government.

Whilst still a major success for the ‘Drop The Duty!’ campaign, Miles Beale commented that although Budget 2015 is “the first step towards supporting wine businesses that are looking to invest in the UK, create jobs and back British pubs”, he was nevertheless “disappointed that the UK’s 30million wine consumers did not receive a duty cut.”

Perhaps Danny Alexander and the Lib Dems had something better planned for wine lovers in that yellow box…